The Commerce Ministry has ordered all related agencies to be on guard against smuggled crude palm oil from Malaysia and Indonesia as the state aims to prevent surplus volume in the next 3-4 months.
Chutima Bunyapraphasara, the acting commerce minister, said the ministry has ordered officials to inspect the stock of crude palm oil every week and conduct monthly inspections to prevent smuggling.
"Normally Thailand does not allow the import of crude palm oil to protect local farmers, while the two other countries are also large palm oil growers," Ms Chutima said. "This prevention measure is aimed at protecting the new surplus volume because the government solved this problem in the 2018 crop year."
She said the ministry expects 3 million tonnes of crude palm oil to hit the market this year, up from 2.5 million tonnes in 2018.
For the 2019 crop year, the government is enhancing measures to absorb crude palm oil because it doesn't want to repeat the surplus.
Local demand for cooking oil, mainly from crude palm oil, stands at 1 million tonnes annually. Roughly 1 million tonnes a year is allocated for biodiesel with 7% methyl ester content, extracted from crude palm oil, also known as B7, to be distributed at petrol stations nationwide.
The 2.5-million-tonne volume in 2018 had a surplus of 500,000 tonnes, and the government had to take drastic action to increase the methyl ester content to 20% in biodiesel, also known as B20, and use crude palm oil to generate electricity.
Ms Chutima said crude palm oil stocks normally stand at 200,000 tonnes a year, which is the appropriate level, but the stock in 2019 is projected to reach 290,000-300,000 tonnes.
Last year, the stock stood at 370,000 tonnes.
"All related government agencies will frequently inspect the crude palm oil stocks, and all records can be traced back to original production and plantations as well as border provinces," Ms Chutima said.
She said that while crude palm oil prices in neighbouring countries don't differ significantly, the government must be vigilant about protecting local farmers' benefits.
Oil palm fruit sells for 2.40 baht per kilogramme, and the government anticipates a price increase during April-May.
Energy Minister Siri Jirapongphan said major retailers to sell B20 include Bangchak Corporation, PTT, Shell Thailand, PTG Energy and Susco. Only trucks and buses are B20-compatible.
The Energy Ministry has extended the subsidy period for B20 to May from the February expiration, making the retail price lower than B7's by five baht per litre.
"B20 consumption in February was 16 million litres, almost double the 8.7 million litres in January, so the ministry expects an increase to 90 million litres in May," Mr Siri said.
He said that once the plan is achieved the local demand for crude palm oil will increase to 1.6 million tonnes a year from B7 alone at 1 million tonnes.
Crude palm oil for power generation is 160,000 tonnes during February to April.
"The ministry is confident that the stock will level out at 200,000 tonnes in 2019," Mr Siri said.
